July 2019

How to Master Your Franchise's Financial Operations

4 minute read

In order to flourish, franchise owners must become masters in managing credit, processing payments and controlling cash flow. Here's how.

Franchise businesses always seem great at first, but the challenges of managing all the finances can sometimes feel overwhelming. By adding helpful tools, you can turn those accounting complexities into new opportunities for success.

Follow along to learn what you can do to master those dollar-driven day-to-day operations of your franchise business, including managing credit, processing payments and controlling cash flow.

Keep your money in order so you can focus on the business

If you are finding it a challenge to pay employees, pay yourself and pay the bills, you may need to assess your options to increase the efficiency of your working capital management.

Working capital is the cash your business needs to operate at any given time. Having a clear picture of your assets and liabilities is imperative, as it will enable you to plan how to best leverage your cash on hand. A misstep here, such as not being able to cover payroll or pay vendors in a timely manner, for instance, can harm relationships with your employees, suppliers and ultimately, your customers.

In addition, attention to business finances is key to long-term success, especially when it comes to maintaining your inventory. By consolidating spend into the American Express Business Card program, franchise owners are able to harness a high spending limit, easier reconciliation and central purchasing help to store and manage inventory and so supplies can be accessed quickly.

Pay bills with ease

Successful franchises find opportunities to streamline their payment solutions. The most efficient way to manage invoice payments is through a central, automated system. While it might sound like something reserved for companies with tens of millions in annual sales, even small businesses can take advantage of a digital hub for purchase orders, invoices and payments.

Using the right supplier payment solution can help create efficiencies by improving expense reconciliation and reducing fraud risks, as well as increasing visibility into your business spending, which can uncover opportunities to eliminate redundancies or non-preferred supplier use. Doing so can save you and your team time, translating to workflow efficiency savings that flow to your bottom line.

For instance, franchise owners managing multiple locations and different sets of financials have found that American Express' solutions for centralized and decentralized ecosystems can significantly help streamline comparisons and cost analyses. The ultimate goal—managing your finances so you can continue to develop and grow your franchise's reach.

Make your credit work for you

It sounds obvious but be sure to align your credit usage with your business needs. For example, you can turn costs into revenue when you pay for eligible business purchases or your franchise fees with a rewards credit card, or by potentially entering into a cash incentive or pricing plan with suppliers, in which they offer payment discounts when paying within certain periods of time.

Negotiating even a 2 % discount with a vendor for paying a net-30 invoice within 10 days, for instance, could result in significant savings for your franchise, especially if it is a high-volume supplier. Using an American Express business credit card can allow for such expedited payments as you can reduce your funding gap with up to 55 days* of unsecured credit, enabling you to keep your cash on hand for longer while satisfying your accounts payable.

Expand your revenue by enabling the customer experience

The American Express 2019 SME Global Pulse study conducted by Oxford Economics shows that social and demographic shifts are considered a threat by 30 % of small and medium enterprises (SME), including franchise businesses. Think about how you can tailor your services or products considering shifting values and attitudes among your customers and vendors. Also, don't forget to cultivate employee engagement, since your people is often the lifeblood of an organization. For example, consider utilizing American Express Membership Rewards® points to offset costs of employee engagement contests or reward a top-grossing employee with a travel stipend.

Learn how American Express can help you grow your franchise business with the right payments and working capital solutions. Visit https://business.americanexpress.com/ca or call 1-877-891-0821.

* As a charge card, the balance must always be paid in full each month in which no interest charges will apply. The interest free grace period is 28, 29, 30 or 31 days from the closing date of the current statement to the closing date of the next statement depending on the number of days in the calendar month in which the closing date occurs. The number of interest-free days varies based on a variety of factors, including when charges are posted to your account, whether your account is in good standing, and the closing date of your statement.